Broker Violations Next Up For State AGs

[Secret!]

Broker Violations Next Up for State AGs

The origination practices of Brokers and their Loan Officers are starting to fall under the microscope of various State's Attorneys General, as well as the FBI white collar division, who says this is "the decade of mortgage fraud" all across the Country.

I spent a great part of this past weekend reading the dead-tree issues of the last three weekly National Mortgage News newspapers I hadn't gotten to, the February issue of the Broker Magazine, the Origination News, and the latest Scotsman Guide. And, I saw article after article on this subject again and again. Based upon what I have seen, and what I read on various industry discussion boards on the Internet; plus dialogue I have with potential students - I think it's seriously time to double check your compliance with the various laws that regulate how business is done.

Even though I don't have a magic crystal ball, in light of that understanding I have, plus the more than one dozen on-line news and fraud blog I see, I've got a pretty good idea what they're probably looking at.

Here's a few suggested areas to concentrate on: Loan officers who constantly look to doing 'Stated' type loans with the intent in mind to pump-up the applicants income to qualify, instead of seeing that loan product simply as a document collection relief product, and not a Liar's Loan. Those who inappropriately place a much too large percentage of their applicants into the Option Arm & IO products so they can earn a 3 to five point YSP, with little regard as to its suitability for those customers. Those work-at home originators, who have no, or nearly no supervision and are loose canons focusing on their own commission checks as their number one priority; frequently with GFE's that seem to commonly miss the YSP line getting completed. Those originators who come across applicants in far-away States and use/rent the license of another Broker where the customer lives, and violates RESPA Section 8 by paying an unlawful kick-back merely for using the other broker's license. Property flips and straw-buyer loans are back in vogue again, be sure the people who handle those transactions have significant experience in the industry to spot the tell-tale signs of fraud, and not get carried away with their potential commission check in the forefront of their thoughts.

By no means is this definitive listing of the wrong-doing that's so rampant in the industry, but easily some of the more egregious examples.